Choosing Your Shop Software: Hosted or Licensed?

by Arianne Foulks of Aeolidia

If you’re ready to start selling online, you have a lot of options for how to begin. How you choose to start will depend on how much work you’d like to do yourself, what you can afford to invest, and what stage you’re at with your business.

There are lots of things to consider, but in this article, I’m going to stick to the difference between choosing a hosted shop solution, and setting up a self-hosted shop.

First, some definitions

A hosted shop is one where your site will be set up with a third party service. Usually it will be their domain name with your shop name as part of the URL. You can think of this like renting an apartment. You can set up all your furniture and add your posters to the walls, but you can’t paint, knock down walls, or replace the appliances. When the garbage disposal breaks, the landlord is there to fix it right away, and when it’s time to replace the smoke detectors, the work is done on schedule without you having to ask about it.

Examples of hosted shops include: Etsy, Big Cartel, eBay, Amazon Marketplace, Shopify, Yahoo! Merchant Solutions, etc.  Many big web hosts have their own ecommerce programs as well.

A self-hosted shop is one where you purchase your own hosting and domain name, then you install ecommerce software to run your shop. This is more like owning a house. You can add a second bathroom, change the layout of the interior, and get everything set up exactly as you’d like. However, you’ve got to replace the roofing when it gets old, and if the sink stops draining, you have to hire a plumber.

Examples of self-hosted software include: osCommerce/Zen Cart, Magento, Joomla, CKGold, Miva Merchant, etc.

Hosted shops

If you choose to set up a shop with a third party, using their service on their site, here is what you can expect. This is general, as there are many different services with different features.

  • Speed of setup: Fast! You will have to have photos of your products and product descriptions ready, but once you sign up for the ecommerce service, you’ll be able to start adding your items instantly. Depending on how many products you have, you could probably set up a shop on Etsy in a few hours, or spend a weekend getting everything perfect.
  • Pricing: Some hosted shop services cost quite a bit more than setting up a self-hosted shop, while some cost less. Most hosted services will charge you a percentage per sale (this is in addition to any PayPal or other payment gateway fees). Some charge you more to list more items, so what starts as affordable can soon add up as you have to upgrade your plan.
  • Ease of use (shop owner): Most hosted shop services are intended to be very easy to get started with and use.
  • Ease of use (customer): Some hosted shop services will only have one payment option (often PayPal, which can be confusing for customers who aren’t accustomed to it). You may find that there are things that are unique about your items or process that don’t work well with the hosted service, but you don’t have the option to adjust the shop system to work perfectly for your items.
  • Look and feel: With a hosted shop, you may only be able to add your own banner to the top of the shop, or you may be able to select from their design templates. With some services, you can do more serious customizing, but will likely need to hire a designer to make something truly unique. Your shop may not look as professional or established to a customer when using a hosted service, rather than having your own shop.
  • Features: This depends on the service, but with the more basic hosted shops, you may not be able to have gift certificates, coupons, wholesale pricing, gift registries, etc.
  • Generating traffic: In some cases, when you use a hosted service, you will get some traffic just from being on their site. This is kind of like setting up shop in a mall – the customers are already there and you just need to get them to come to your door. However, while you are getting new customers from the host site, you also have to worry about your own customers leaving your shop to buy a similar item from a competitor on the same site.
  • Testing & troubleshooting: I’m imagining this is virtually nonexistent on sites like Etsy where the checkout process is simple and standard across all shops. With a hosted solution, I would expect everything to work exactly as it should “out of the box” without you having to check everything.
  • Upgrading: The nice thing about a hosted shop is that if there are any bugs or problems, they will be fixed across the board for everyone, without you having to make a special request. Likewise, if the site owners come up with a new feature, they will roll it out to everyone, and you’ll get it as soon as it’s ready. Your site will always be up to date and in good working order. However, if there is a new feature or change that you don’t like, there’s nothing you can do about it – you’re stuck with it!
  • Security: You’re pretty much guaranteed a secure site with a hosted solution, as security issues are quick to be noticed and fixed. Aside from using a secure password for your shop account and your PayPal account, you won’t have to think about this.
  • Flexibility: With a hosted shop, in most cases you can’t move from one service to another. You can certainly close your shop and start a new one, but can’t easily save your customer/order info, or export your categories and items to start over with somewhere new. Are you able to create a backup, or are you out of luck if the service loses your data or goes out of business?
  • Trust: With a hosted shop, you not only have the trust that your customer has for the parent site, but often there is a rating or review/feedback system that can prove to customers that you’re trustworthy.

Self-hosted shops

If you choose to set up shop software with your own web hosting plan, here is what you can expect. Most people aren’t going to be able to do all of this on their own, so this list assumes that you’re working with a web developer to create your shop. Again, specific features will depend on the software and the developer.

  • Speed of setup: This is going to take a while, especially if you’re getting “the works.” At Aeolidia, we usually estimate about two months for a full ecommerce project, including site design work. This time includes your time to add all your content to the site and get everything set up as you’d like. Many web developers will be able to speed this process up for you if you’re able to pay a rush fee to be prioritized above their other clients.
  • Pricing: Extremely variable! There are lots of free and cheap ecommerce programs, and web hosting fees have a wide range. It is easy to find web hosting for less than $10 a month, and domains for less than $10/year. You will need to pay your web developer, and you may also buy an SSL certificate ($15+ a year). Your payment processor will also have fees.
  • Ease of use (shop owner): This depends on the software your shop is run on, but as you’ll have many more options and controls than in a hosted shop situation, it is bound to be more difficult to get started with your self-hosted shop. However, a good web designer will provide tutorials and advice and hold your hand throughout the learning process, and soon you’ll be an old pro!
  • Ease of use (customer): When you’re setting up your own shop, it can be tailored to your product and your customers, and you can make every step of purchasing as smooth as possible. You may also be able to offer your customers more shipping or payment options.
  • Look and feel: With a self-hosted shop, you’ll usually be hiring someone to create a design for you, but you also have the ability to choose from existing design templates. When you work with a web designer, you can have a truly unique look for your site. It is easy to appear to be a bigger business or look more professional when you hire a designer to work on a custom shop for you.
  • Features: The sky is usually the limit when setting up your own shop. Aside from features that come standard with your cart program (gift certificates, coupons, discounts, group pricing, minimum and maximum order amounts, etc.), you’ll often find that if you have something special in mind you can have the software customized to create new features that make your whole process simpler.
  • Generating traffic: There won’t be any built in traffic for a new self-hosted site, but there are lots of ways to generate interest, and you aren’t selling among your competitors. In many cases, it will be easier to get search engine traffic, and you may find that blogs and publications are more likely to link to a site on its own domain than an eBay shop or the like.
  • Testing & troubleshooting: When setting up shop software on a web host, there are many features, many ways to set up shipping and payment methods, and lots of things to test out before opening your doors to the public. A good web designer will do very thorough testing, as well as let you know what to look out for yourself.
  • Upgrading: When software is installed on your own host, it will eventually need to be upgraded. Upgrades to ecommerce software include security improvements, bug fixes, and new features. Your web developer will be able to upgrade your site, and you should budget for a quick upgrade or two once a year.
  • Security: With your own shop, you will be responsible for keeping the software upgraded and up to date. You may be collecting credit card data through your shop admin, so you will need to purchase an SSL certificate, and to follow good practices for credit card security. Good passwords are very important. Your web developer will walk you through what’s important here.
  • Flexibility: You will be able to back up all your files and data (customers, orders, items, etc.) as regularly as you’d like, and nothing stops you from switching web hosts. In many cases, you can change ecommerce programs entirely, just adjusting your shop data to work with a new system.
  • Trust: You will be responsible for your customer’s feeling of trust, from warm and professional website text, to plenty of info on the “contact” page, to making sure your shop has a professional look and feel with a secure checkout. You can also add customer testimonials, product reviews, and press mentions to show your customer that you’ve been in business long enough to know what you’re doing.

Still not sure?

If you’ve never sold your own items online before, starting with a hosted shop is a great way to test the waters. That way you’ll know for sure if you like listing, photographing, packing and shipping orders, and honing your customer service skills before you’ve made an investment on a more complicated project. If you start at Etsy, then decide selling online isn’t for you, you won’t be out too much money or time.

Starting on Etsy or somewhere similar can also be a great way to try things out with your business. See what sells and what people aren’t interested in. Try out different pricing on different items, experiment with what shipping rates work best. Once you know more about your business and your customers, you’ll be able to approach your dream website project with more knowledge about what will work for you.


  1. So true. I started on Etsy and dream of going to a self hosted site one day. I did want to be sure that my products would sell before I went the self hosted route and Etsy has been a good place for my test run. My goal now is to build sales so that I can one day afford my own site and maintain it. Thanks for sharing this valuable info. I am sure I will refer to it again in the future!

  2. Jill says:

    This is incredibly helpful–thank you! As a would-be entrepreneur investigating starting my own e-commerce site, I can’t tell you how much I appreciate your generosity in setting this up and inviting such terrific contributors. I know many friends who could have really used this when they started out, and I have already found it invaluable. Thank you!!

  3. Kay Murray says:

    Interesting and insightful! I have a love/hate relationship with eBay and their fees… but items aren’t turning over AT ALL on my ecommerce shop.
    I found it difficult to be home on Sundays to relist items on eBay, alot of the items I’d start at barely over wholesale and barely make any profit from, and so ended up not making much money the month or so I tried. Should I raise my prices and try for a longer stretch?

    Kind of trying to decide which direction to take things in as far as eBay or self hosted, or a mix of both.

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